By Kevin Soubly | MiBiz
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WEST MICHIGAN — Boeing’s new 787 Dreamliner jumbo jet finally took off on its maiden voyage a month ago — three years later than promised and millions over-budget.

For a handful of West Michigan companies that will supply parts and services to the Dreamliner, the launch marked the end of a nightmarish period of delays and added costs. Production is underway to fill the supply line, and companies are already seeing additional opportunities such as replacement parts and service on the horizon. That has some experts around the state predicting the program could be a turning point for Michigan’s aviation industry and, more generally, the state’s industrial reinvention.

“What the 787 means to (Boeing’s) suppliers is that they’re going to have a product track lifespan of at least 10 to 20 years of supplying parts to what I’d consider some of the most advanced airplanes in the world,” said Gavin Brown, co-founder of the Michigan Aerospace Manufacturers Association (MAMA). Brown predicts the industry will grow 15 to 20 percent a year even in the midst of a depressed state and national economy, helping fuel Michigan’s turnaround.

More than 50 companies throughout Michigan and the surrounding region are involved in the production of Boeing’s new flagship jet. Companies including GE Aviation in Grand Rapids; Muskegon’s Johnson Technology Inc., a wholly-owned subsidiary of GE Aviation; Alcoa Howmet in Whitehall, Parker Hannifin Hydraulics in Kalamazoo; Flexfab LLC in Hastings; DornerWorks Ltd. in Grand Rapids; and Zeeland’s Gentex Corp. collectively will bring into West Michigan hundreds of millions of dollars in contracts to design or manufacture components on the Dreamliner.

Because of project delays and the nature of first-year production on large-scale products, Boeing’s suppliers will not see a significant increase in profit this first year, said Brown. “The real increases in production and profit will come several years down the road once the airliner needs repairs and replacement parts,” he said.

Provided the suppliers and manufacturers can maintain their quality and pricing, Michigan stands to see billions of dollars worth of activity over the next decade through Dreamliner contracts, Brown said.

Boeing’s luxury passenger jet has been hailed as innovative, boasting a 20-percent improvement in fuel economy because of its light weight, as well as a spacious new interior and first-of-its-kind technological improvements and creature comforts. But the improvements come at a cost: The Dreamliner’s list price is $185 million.

Nonetheless, Boeing made a strategic branding decision to “improve the passenger experience” onboard the Dreamliner, said Colleen Kottlowski, Boeing’s regional director of passenger satisfaction and revenue. And innovations and improvements are what led to much of the Dreamliner’s high cost, said Enoch Jen, SVP at Gentex, a second-tier supplier for the 787’s first-in-the-world electrochromatic dimmable aircraft windows. “Boeing wasn’t so fixated on trying to reduce the costs to the bare minimum and instead was more interested in the appeal to the passenger,” he said.

While the jet’s price tag hasn’t scared off carriers from ordering the planes, delayed delivery dates have caused some of them to cancel orders. China Eastern reportedly canceled an order for 24 Dreamliners, and analysts predict more cancellations from Chinese airlines, according to a Reuters report. Boeing claims it still has a backlog of more than 800 orders for delivery through 2020.

The delays and pressure to deliver have forced suppliers to hit the production runway at Mach speed.

“The speed at which the 787 program is ramping up is much faster than what is typical. This is the fastest-growing commercial airplane in terms of sales that there’s ever been,” said Curtis Evans, director of human resources at Johnson Technology, a supplier of GE engine components for the Dreamliner.

Michigan companies and Boeing’s other suppliers have more to profit from than just the initial contracts. In addition to the primary exposure associated with the first product launch, “anytime you’re on a major contract at the beginning of a product lifecycle, you have the opportunity to help supply repair services and replacement parts,” Evans said.

“We’re optimistic about the Dreamliner,” added Jen. “This is the largest launch in aviation history, and we’re optimistic that we’ll gain future business on other aircraft and with other manufacturers as a result of this project. [The Dreamliner] gives us a lot more credibility as a supplier.”

The cash flow and credibility associated with the Dreamliner program should provide economic benefits and, more importantly, a shift in perception for the state, experts say. It would help prove Michigan’s global competitiveness and indicate a diversification away from the automotive industry.

“Michigan is a great place for businesses because we have this incredible manufacturing expertise here. We make things in Michigan,” said Michael Finney, president and CEO of the Michigan Economic Development Corp. “And it’s always exciting to go after grand programs like the Boeing Dreamliner and other really big projects, but there are many smaller opportunities as well.”

“To some extent, we were our own worst enemy,” Finney said. “As a state, we didn’t make sincere efforts to really transform ourselves, and we led the country into the recession. But now over the past few years, (Michigan) has put a lot of effort into programs like battery and wind technology and the aerospace industry. We just have to continue to focus on these other sectors so that we don’t again find ourselves in a constant up and down in terms of our economy.”

While Michigan’s roots are in the automotive industry, said Brown, that experience of designing and manufacturing products on a mixed-cost basis is valuable.

“We can now share that experience and add to it by not only taking highly engineered parts, but also combining them with the best manufacturing processes for the aerospace industry,” he said.

Though it could be considered a “home run” itself, the Dreamliner project is generally seen as a great starting point for Michigan’s aerospace industry because it underscores Michigan companies’ abilities to develop truly innovative and high-tech products at a reasonable cost.

“The aerospace industry will help keep the Michigan economy on the upswing. Not only do we have the technical engineering expertise at hand, but also we have in place business models that ensure how to be the best manufacturers at a cost-competitive price that the aerospace industry is looking for,” Brown said.

Boeing’s 787 Dreamliner jets are currently servicing routes in Asia only, although United-Continental expects to add the aircraft to its line-up partway through 2012.